Exam 16: Retained Earnings and Earnings Per Share

How will a company's retained earnings and total stockholders' equity be affected by the declaration of a stock dividend to be distributed at a later date?

Daniel Company had 30,000 shares of common stock outstanding on January 1 and issued an additional 9,000 on August 1 of 2016. The company also has $100,000 of 8% convertible bonds outstanding during the year. Each $1,000 bond is convertible into 5 shares of common stock. Daniel had after-tax net income for the year of $160,000, and the tax rate was 30%. Required: Compute the appropriate earnings per share amounts) to be reported on Daniel Company's 2016 income statement, and explain your answer.

On January 1, 2016, a corporation had 10,380 shares of common stock outstanding, and on June 1, it reacquired 6,000 shares. Despite a net loss for the year of $180,000, the company declared and paid cash dividends of $24,000 and $28,000 on common and preferred stock, respectively. What was the earnings per share for 2016?

On November 1, 2016, the Cranberry Construction Company declared a property dividend payable in the form of bonds held for long-term investment purposes. The bonds will be distributed to the common stockholders on December 15, 2016. The bonds to be distributed to the common stockholders originally cost Cranberry $210,000. Fair values of the bonds on various dates are as follows: Which one of the following amounts should be used to record the appropriate credit to Property Dividends Payable?

The Stansbury Company has issued 10%, partially participating, cumulative preferred stock with a total par value of $200,000 and common stock with a total par value of $800,000. The preferred stock participates up to 15% of its par value. No dividends are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $160,000 are distributed?

The basic earnings per share are $1.25 and the diluted earnings per share are $1.18. Based upon this information, Tulip must disclose

What is the basic earnings per share calculation? What is the weighted average shares calculation?

If a company makes a prior period adjustment, which of the following describes how it must be reported?

Other Comprehensive Income or loss might include what four items?

The Michael Company's stockholders' equity accounts have the following balances as of December 31, 2016: Common stock, $20 par 25,000 shares issued of which On January 2, 2017, the board of directors of Michael declared a 10% stock dividend to be distributed on February 15, 2017. The market price of Michael Company's common stock was $75 per share on January 2, 2017. On the date of declaration, the retained earnings account should be decreased by

The assumed conversion of convertible debt and preferred stock in diluted earnings per share calculations affects

Which of the following is not an error that would require a company to record a prior period adjustment? Assume all are material.

Match the appropriate key term with the correct definition below. ______ 1) investors listed on the stockholders' ledger will receive dividends ______ 2) not enough cash to pay a dividend, a promissory note is issued ______ 3) common stock outstanding and possibly nonconvertible preferred stock ______ 4) It is the assumption that all convertible stocks or bonds have been converted into common stock at the beginning of the earliest reporting period ______ 5) negative retained earnings ______ 6) return of capital rather than a distribution of earnings ______ 7) stock stops selling with dividends attached ______ 8) unavailable for dividends

Which one of the following statements concerning earnings per share amounts is true?

Which one of the following indicators is intended to show the potential impacts of possible future events on a corporation's performance?

The Mark Company has $250,000 to pay dividends. The company has 25,000 shares of 8%, $50 par, preferred stock and 100,000 shares of $5 par common stock outstanding. The common stock is currently selling for $43 per share and the preferred stock is selling for $95 per share on the stock market. Required: Determine the amount of dividends to be paid for each class of stock in each of the independent situations. 1) Preferred stock is nonparticipating and cumulative; dividends are in the arrears for 1 year at the beginning of the year. 2) Preferred stock is fully participating and cumulative. 3) Preferred stock is nonparticipating and noncumulative. 4) Compute the dividend yield on the preferred stock and common stock for number 3.

Describe the two types of corporate capital structures.

Marco, Inc. determined the following information concerning its common stock during 2016: January 1 15,500 shares outstanding March 1 Issued a 3-for-1 stock split July 1 Issued 1,500 additional shares October 1 Reacquired 2,000 shares Required: What should Marco, Inc. use as the denominator for its basic earnings per share calculation for 2016?

Specific EPS disclosure is regularly reported for extraordinary items under

The Chester Company has issued 10%, nonparticipating, cumulative preferred stock with a total par value of $400,000 and common stock with a total par value of $800,000. No dividends are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $180,000 are distributed?